Underlying pre-tax profits surged 38 per cent to £397m at energy utility SSE (SSE), but these well flagged results still beat analysts' expectations by around 5 per cent. The board also stuck to its dividend policy and confirmed a rise of retail prices index inflation plus 2 per cent to take the payout to around 84p for the full year, adding that future increases will also be above inflation. The reported pre-tax loss in our table reflects a £331m adjustment in the valuation of derivative contracts to hedge commodity prices and borrowing costs as well as £89m for the purchase of emission allowances at the Medway power station.
One of the main profit drivers was a recovery in the retail business as a cold snap saw gas consumption up 27.9 per cent and electricity up 2.8 per cent, which helped reverse last year's £101m operating loss into a £76m profit. Running the electricity networks is also going well and operating profits there were up 19 per cent to £399m, contributing the majority of group profit. However, these gains were offset by a lower contribution from the wholesale business, where profits declined 44.5 per cent to £123m. That mainly reflected lower spreads for gas-fired generation and reduced output from renewables sources due to calmer and drier weather compared with last year.